'Benign' inflation picture gives SARB MPC scope to cut rates - expert
This marks the third consecutive decline in the inflation print – bringing it to the lowest reading in over three years.
JOHANNESBURG - The annual consumer price inflation has finally dropped below the South African Reserve Bank’s midpoint target of 4.5%, easing to 4.4% in August.
This marks the third consecutive decline in the inflation print, bringing it to the lowest reading in over three years.
Stats SA released the inflation data on Wednesday on the eve of the reserve bank’s decision on the repo rate, which still sits at a 15-year high of 8.25%.
Headline inflation has remained in the reserve bank’s target band of 3 and 6 for over 12 consecutive months.
In July, inflation fell to 4.6% before dropping again to 4.4% in August in line with market expectations.
Core inflation was also reasonably subdued in the month under review.
Group head of macroeconomic research at Standard Bank, Elna Moolman, said that this would likely give the central bank’s monetary policy committee a little wiggle room when they decide on the policy rates.
“This reasonable benign inflation picture clearly creates scope for the reserve bank to start cutting interest rates and we still think the reserve bank will announce the first interest rate cut,.although it will still be a shallow and short-lived cutting cycle.”
Some economists have predicted a 25-basis-point cut.